Post office in a steeplechase

The newly built Dak Bhaban in Agargaon in the capital keeps alive the legacy of a great public service that kept people connected for hundreds of years.

With an imposing architectural edifice crafted in replication of the street side mail drop-box, the headquarters of the Bangladesh Postal Department reminds us of the significance of postal service in the pre-internet era when personal letters, official correspondences, parcel services and even money transfers were all under its ambit.

The much-adored manual postal services have been overtaken by modern communication tools like the internet and cellular phone. The glamour is lost but not the pride. The Dak Bhaban, at least, carries that message.

There have been a lot of attempts to ensure the sustenance of the postal services in the face of fierce technological development, particularly in the arena of communication. The initial attempt was the digitisation of over eight thousand post offices across the country.

It was a holistic move but could not show any expected pay-off.  With the advent of cellular technology and its ever-growing availability for all, the enthusiasm for up-scaling the postal department became a stupendous task.

Technology coupled with modern business operating models overwhelmingly veiled the shine of the postal department everywhere and forced it to hang by a thread. Nevertheless, ideas and plans kept on rolling for bailing the postal service out of the morass, one important and popular thought being its use as as a service for mobile financial services (MFS).

Incorporating a postal network to deliver financial services is not a new idea. The first postal financial service was opened in 1861 when Her Majesty's Postal Department in the United Kingdom established a savings bank to encourage poor people, particularly immigrants, to save money and make remittances. It remained in force for over a century until the increasing use of digital communication technologies started pounding the traditional postal practices.

There were attempts in many countries across the globe to keep their postal systems alive with the inclusion of financial services. From Korea to South Africa; Indonesia to Brazil; the USA to India, there had been attempts to engage the postal departments in providing financial services, particularly to the non-banking people or those living in 'banking deserts'—areas not having conventional banking service points. Unfortunately, all attempts ended up as trials and errors.

The first attempt in this regard in our country was a start-up titled Nagad about two years ago. Branding itself as an off-spring of Bangladesh Post Office and using its logo (postal department) in all communications, Nagad has been operating under a No objection Certificate from the central bank.

In the backdrop of controversies regarding its actual ownership structure, Nagad did succeed in marshalling an encouraging swing in the landscape of mobile financial transactions in the country.

Pegging itself on the neck of the postal department and through comparatively cheaper charges, it succeeded in courting a significant number of subscribers. Despite its blitzkrieg success, Nagad still seems to be walking on thin ice.

While its ownership structure is yet to be legally attested and proper license to be obtained from the regulator, Bangladesh Bank, some recent reports of suspicious transactions through its services garner worries.

All worries about Nagad aggravated further when the Bangladesh Bank on Monday directed all banks not to open accounts in the name of Nagad Limited. This is a fresh challenge for the organisation and increases worries for the customers.

In its quest for achieving financial inclusion, the authorities have taken steps to innovate and introduce digital financial services. In that pursuit, Bank Asia and Bangladesh Postal Department signed an MoU aimed at providing financial services to common people using the postal department outlets across the country.

Bank Asia has a large agent banking network while the postal department has eight thousand plus e-postal points. Envisaged as a postal banking service, it is an extension of agent banking practice, not too distant from mobile financial services.

The domain of mobile financial services in Bangladesh is a story of astounding successes in enabling millions of unbanked people to have financial inclusion. Propelled by bKash more than a decade ago, the mobile financial services have greatly remodelled the banking architecture in the country creating opportunities for anyone to have access to financial empowerment that range from transfer of money to recharging mobile phones to even payment of bills for utility services.

This particularly came as a boon for the poorer and illiterate segment of the society who remained deprived of the benefits due to their status as well as the non-availability of banking infrastructure in their remote areas.

Through the Mobile Financial Services (MFS) Guidelines in 2011 and subsequently enacting the Bangladesh MFS Regulations in 2018, Bangladesh Bank has been playing a responsible guardianship role in steering the new façade of financial transactions in the country.

With as many as fourteen providers, the MFS scenario today is robust and a fast expanding one. Over the years, it has seen a manifold rise in enrolment of customers while the list of services kept expanding as well.

Now, with the interest and concentration on using the postal department for financial inclusion of all, the mobile financial services scenario will have a new outlook. However, the regulator, Bangladesh Bank, has to roll up its sleeves to constantly and deeply watch the activities of the MFS providers.

Mobile financial services have made a significant impact on the lives of the people in this country. It has empowered the non-banking lot of the population, reduced the gender gap, contributed to improving health, facilitated the education system, created opportunities for income generation and above all, brought a sense of security and comfort for the customers.

The role played by the MFS providers during the pandemic deserves special mention for enabling millions of poor workers to receive their salaries and government stimulus without any hassle and being far away from workplaces. Secondly, as e-commerce is gaining ground and popularity, the digital payment scenario will also be more active.

In such purview, caution must be maintained in using the postal network, which still enjoys public interest and enthusiasm for its long and trusted service. However, it needs to have its massive capacity development, including infrastructure, human resources and technology, in tune with time. It cannot be put into a steeplechase in the name of doing good. Any failure would force it to become a myth.   

Mohiuddin Babar is the CEO at Bizcare.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.